Economic inefficiencies and �over-regulation in air transportation – current issues in Europe

Abstract

Against the background of fundamental changes in the air transport sector in the last years (deregulation, emergence of Low Cost Carriers and alliances, rising fuel prices, new ODs from and to emerging markets...), we look at inefficiencies that still occur in the sector, be it on airline, airport, ATC and regulatory level. Some of our findings include the following: LCC operate very efficiently but suffer from inefficiencies in the ATC and airport sectors; legacy carriers still operate expensive mixed fleets, complicated and consumer-unfriendly pricing systems and with high overhead costs, resulting in high fares and consumer rip-offs. In the airport sector, investment rarely meets demand. Many airports are oversized or gold-plated, while others lack necessary investments. Regulators and Governments tend to overregulate air transport, e.g. when it comes to consumer protection, taxation and international air transport relations.